The present invention relates in general to a credit verification system, and more particularly to a system for use with point-of-sale market transaction terminals which provides instant credit card status verification at the terminals.
Conventional credit card status verification techniques employ a verification terminal connected to a central computer via a dedicated or dial up data link, such as a telephone line. Such a configuration is described in U.S. Pat. No. 3,938,090 to Borison et al. The apparatus disclosed in this patent obtains a credit card number either through manual input or by scanning a magnetically encoded stripe on the card, and sends the card number via the data link to the central computer where the card's status is checked for approval or rejection.
The centralized nature of this scheme poses several potential problems. First, the verification response time is highly dependent on the amount of subscriber traffic directed to the time shared central computer and the grade of data transmission circuits employed. During peak hours, the response time may be increased due to traffic congestion, and in some foreign countries where the transmission facility grade is poor, this wait may be further prolonged by repeated dial-up attempts at the expense of customer convenience.
These types of systems are also susceptible to extended service interruptions resulting from central computer down time or malfunctions in the data link. Further, extensive monthly fees are accrued for the use of the data link and the central computer processing time. There is also the possibility with these types of systems that an unauthorized device could be inserted within the centralized network loop to provide a false verification indication.
Yet another drawback to prior art verification systems is that the central processor's database does not contain a comprehensive record store of all authentic card numbers allocated, both issued and unissued, because such a data set compiled in commercial format would demand a great deal of computer memory space and be costly to maintain. Instead, only records of "bad" credit cards are stored in the database so that verification is performed on an exception basis. As a result, it is impossible for the central processor to distinguish a genuine card number from a counterfeit one without the initiation of a discrepancy report, and this effectively prevents prior art systems from being able to detect fraud due to card alteration.
What is needed then is a credit status verification system which does not rely on a centralized computer and associated data links, and which provides status information for all credit cards, both issued and unissued.